Craft beer's big impact on small towns and forgotten neighborhoods

When Neil Gurnsey grabs a drink at his favorite bar, he's delighted when nobody knows his name.

Gurnsey loves to see his new watering hole, the taproom at Hand of Fate Brewing, packed with people from outside Petersburg, Illinois, a small bedroom community of roughly 2,200 near the capital, Springfield. Started last May by Mike Allison, a former funeral director who turned his homebrewing hobby into a thriving small business in his hometown, Hand of Fate took its name from the town's origin story (during a card game between two early settlers, Peter Lukins and George Warburton, Warburton drew the losing hand).

After just a year, the small brewery has brought good fortune to the town. After taking over an old Dollar General discount store in the sparsely occupied town square, the brewery-and-taproom has become a community hub and a catalyst keeping businesses open later. It's encouraged others—including two new boutiques—to open shop, and drawn visitors from across the region. This year's "Drinkin' with Lincoln" street festival was a big hit.

"Once Mike got the brewery going," says Gurnsey, an assistant vice president at the National Bank of Petersburg, "life was just injected into the square. If I go inside the bar and see that I know just 10 people out of 100, that's great."

Breweries, taprooms, and bars have always been about more than beer, serving as community hubs, gathering places, and sources of local identity and pride. But as Hand of Fate shows, they're also increasingly serving as engines of economic development and catalysts for cities and towns, especially in rural areas.

Allison's business—which churns out a variety of IPAs, cream ales, and saisons—may directly employ 10 people, but the ancillary benefits of the brewery and taproom, like others in the country, radiate into the community in different ways.

As the booming craft-beer industry, which contributed $55.7 billion to the U.S. economy in 2014, continues to expand, more and more municipalities and states have tried to turn this industry into a means to spur growth. According to Bart Watson, chief economist at the Brewers Association, about 80 percent of Americans live within 10 miles of a brewery.

Small towns and abandoned industrial areas are prime candidates for regeneration-by-brewery. Portland-based beer writer Jeff Alworth has seen the industry revive towns across Oregon and the U.S. Amid talk of hops and flavor profiles, drinkers sometimes forget the impressive industrial scale of brewing operations—and the jobs it can provide. A typical taproom makes 300-gallon batches multiple times a day, employing men and women to haul fully loaded, 165-pound kegs across a factory floor, and retrofitting spaces and installing brewery equipment requires skilled craftsmen and laborers.

That requires lots of space, says Watson, which is why brewing, a capital-intensive industry, is perfect for depressed areas with lots of excess and abandoned industrial real estate. That large footprint, however, is part of the reason for an oversize community impact; taprooms and bars are magnets that draw people in, and with traditional bars and VFW halls (Veterans of Foreign Wars) closing, these new spaces become community hubs and event spaces, not just another place to grab a drink. And, according to research by Julie Wartell, a lecturer at University of California at San Diego, bars attached to breweries result in much less crime than regular bars.

Margo Metzger, director of the North Carolina Craft Brewers Guild, has seen craft brewing explode in her state, generating $2.4 billion and 10,000 jobs in 2014. At that time, North Carolina had a little over 100 breweries; a few years later, after big names such as Sierra Nevada, New Belgium, and Oskar Blues all opened facilities near Asheville, the state boasts 215 breweries.

"Local governments are increasingly working to attract breweries and the craft-brew industry in the name of economic development and growth."

The dramatic increase in overall business comes from those bigger names, she says. But when it comes to real economic impact people can feel, it's the small towns, when someone makes a bet on a little-known street, where it matters.

"I've spent my whole life here, and suddenly, you see breweries in forgotten Eastern North Carolina towns such as Rocky Mount and Tarboro," she says. "It gives people a public house and a reason to want to live there. But more importantly, it makes people feel like they're in a relevant place. It's something new, beyond the old story of a fading town they've heard for decades. It's a powerful, kickstarting force, a spark that I've seen time and again in this state."

It's not just small towns; urban neighborhoods have thrived and been reborn with the help of pioneering breweries. Great Lakes Brewing Company helped resuscitate Cleveland's Ohio City neighborhood after opening in 1988, and has been so successful that locals now worry about a beer glut. Wynkoop Brewing Company in Denver, which also opened in 1988, was a pioneer in re-establishing the now-hip LoDo neighborhood. And in Jacksonville, Florida, a string of breweries on King Street, in tandem with a city infrastructure program, brought new life to a former abandoned commercial corridor.

In addition to immediate economic benefits and establishing a sense of place, successful breweries are a huge draw for the increasingly lucrative world of craft-beer tourism. According to Watson, recent Brewers Association data shows that 1.6 percent of craft-beer drinkers take 10-plus trips annually to brewers more than two hours from their home.

A study in Kent County, Michigan, which includes Grand Rapids and breweries like Brewery Vivant and Mitten Brewing Company, showed that these businesses generated $7.05 million in direct spending from 42,426 visitors, who racked up more than 14,000 hotel nights. The latest data from New York state found that beer tourism in 2013 attracted 3.66 million visitors and $450 million in business exclusive of beer sales, supporting more than 3,000 jobs.

Breweries have taken advantage of the trend and created special events, such as Goose Island's release of Bourbon County Stout and the Three Floyds' Dark Lord Day, that draw massive crowds and bring drinkers and dollars to town. Professor Jeff Dense of Eastern Oregon University calculated that the annual Oregon Brewers Festival generated $32.6 million for the local Portland economy. Perhaps the granddaddy of these festivals, Pliny the Younger Day, sees Russian River Brewing in Sonoma County release its famed Pliny the Elder, an imperial India Pale Ale. Last year's event in February drew 16,000 customers and created an total economic impact of nearly $5 million.

"Pliny has been to Sonoma County what Robert Mondavi was for Napa," Ben Stone, executive director of the Sonoma County Economic Development Board, told the local Press Democrat.

Local governments are increasingly working to attract breweries and the craft-brew industry in the name of economic development and growth. Watson says that Virginia, Ohio, and North Carolina have all been aggressive in offering incentives to brewers (at the same time the Asheville area landed the trio of big name brewery facilities, the city of Roanoke, Virginia, was courting companies with a $13 million incentive package). New York state has used brewing as a means to grow local agriculture: The state's farm brewing licenses, for instance, provide new companies with certain retail privileges in exchange for using a certain percentage of crops from in-state. The new license has helped spur the development of local hops and barley crops.

Cities have also pushed to bring more beer into city limits. Chicago turned to tax-increment financing to create a brewery district in the Motor Row District, an industrial area once known for car dealerships. Duquesne, Pennsylvania, a town downriver from Pittsburgh, revised their zoning plan a few years go to make it easier to attract microbreweries, and even bought up old abandoned buildings to sell to potential brewers. Mesa, Arizona, promoted its downtown specifically as a magnet for local brewers.

One of the more striking example was Zoiglhaus in Portland, a city known as a mecca for beer geeks. The city's economic development council invested $1 million to help the brewery as long as it agreed to locate in the Lents District, a far eastern area that's been underinvested for decades.

Back in Petersburg, Hand of Fate's success in building up the town square has meant new opportunities for the company. Allison has already purchased another 2,500-square-foot facility, and he plans to expand into packaging cans and kegs and selling off-site. As far as the brewery's impact on the community, the tap is far from running dry.

"The name of the brewery does come from the town's name," says Allison. "But it's also because everything just really fell into place for us."